Inflation widens income gap
Economic inequalities are increasing due to the inflation crisis, which has been ongoing since the second half of 2021 and peaked in 2022 with the start of Russia’s invasion of Ukraine, according to an Alpha Bank report.
Rising prices for basic goods, food and energy, as well as skyrocketing rents and overall housing costs widen the gap between the poorest and richest segments of the population, while at the same time creating conditions of “impoverishment” for households belonging to the middle-income category, degrading living conditions.
Notably almost one in two households faced difficulty in paying the rent or loan installments or fixed bills last year, while a year ago the corresponding percentage was 29.1%. Almost one in four did not go to the doctor, although they needed to, while almost one in three did not visit the dentist.
Although average disposable income was around 29% higher in 2022 compared to 2014, much of the increase is lost to inflation, with prices in the decade 2014-2023 having risen, according to Eurostat, by 14.6%. Increases in the minimum wage both in 2023 and this year are estimated to have dampened the shocks created by inflation, but only slightly.
